What Is Commercial General Liability?
While every third-party partnership carries inherent risks, ensuring all involved have the appropriate commercial general liability (CGL) policies and endorsements helps mitigate liabilities and maintain compliance.
CGL policies provide coverage in the event of any non-professional negligence resulting in bodily harm, property damage, and other workplace injuries.
This guide outlines the basics of these policies, coverage types, and differences between professional and general liability so you can mitigate risks and create safer partnerships.
What Is Commercial General Liability (CGL)?
Introduced in 1986 to replace the comprehensive general liability policy, commercial general liability (CGL) protects a business from instances of non-professional negligence.
In the event of property damage, bodily harm, or other injuries, these policies cover any resulting liability claims.
ABCs of CGL Coverage
There are three groups of CGL policies aptly referred to as Coverage A, B, and C in the insurance world.
Here's a breakdown:
Coverage A: Bodily Injury & Property Damage
Bodily injury typically includes bodily harm, sickness, or disease, including incidents resulting in death.
Example: A painter is working on a building and falls off his ladder, resulting in a bodily injury claim.
Property damage, as it pertains to general liability, is defined by the educational service International Risk Management Institute (IRMI) as “physical injury to tangible property including resulting loss of use and loss of use of tangible property that has not been physically injured.”
Example: A painter's ladder falls over and shatters a window, resulting in a property damage claim.
Coverage B: Advertising & Personal Injury
Under general liability, combined in standard CGL policies, advertising and personal injury constitutes a category of insurable offenses that produces harm other than bodily injury.
Examples: This can cover claims including false arrest, detention, or imprisonment; malicious prosecution; wrongful eviction; slander; libel; invasion of privacy; copyright infringement; and misappropriation of advertising ideas.
Coverage C: Medical Payments Coverage
This ensures medical or funeral expenses are allocated to an injured party—regardless of liability—in the event of bodily injury or death from an accident under specified conditions.
Note: Other types of liability policies include liquor liability, directors and officers liability, and pollution liability. An insurance professional can help determine the right endorsements for your business.
Types of CGL Coverage
An occurrence policy protects a business from any covered incident during the policy period, regardless of when a claim arises. This type of insurance will cover a business even if the claim comes in after the policy is canceled, as long as the incident occurred within the time frame dictated by the initial policy.
A claims-made policy provides coverage for claims occurring and reported within the specified period set forth by the terms and conditions. If the policy is canceled or the premium isn't paid, claims filed will not be covered, even if the incident occurred when the policy was active.
Difference Between Professional & General Liability
General liability involves non-professional negligence. Instances of professional negligence are covered under professional liability policies.
Professional negligence is most applicable within industries with codes of conduct or standards for your services.
As a rule of thumb, general liability insurance typically covers physical damage to your business, whereas professional liability insurance—also called errors and omissions (E & O) insurance—often concerns libel, slander, misrepresentation, negligence, and inaccurate advice.
Depending on the nature of your business, an insurance broker may advise you to purchase both general and professional liability policies. If you decide to use two different carriers and a claim is made against your business, one insurance company may try to foist responsibility of the payout onto the other. To avoid this competition and encourage focusing on the problem at hand, purchase both from the same insurance carrier.
bcs: Streamlining Your Vendor Management Process
Ensuring all involved in third-party partnerships hold the essential policies and endorsements can shield your company from unnecessary risk exposures.
By securely managing documents, communication, and COI tracking all in one place, you can get back to focusing on running your business.
bcs is a leading vendor management solution providing full- and self-service COI tracking, document maintenance, and so much more. To learn more about streamlining your vendor management processes, schedule a demo today.
Learn from the pros about risk-mitigation, document tracking, and more, with expert articles from bcs.